MIAMI — Millions of Americans will be priced out of health insurance under the health-care
overhaul law because of a glitch that hurts people with modest incomes who can’t afford family
coverage offered by their employers, a leading health-care advocacy group said yesterday.

Tax credits are a key component of the law, and the White House has said the credits, averaging
about $4,000 apiece, will help about 18 million individuals and families pay for health insurance
once the Affordable Care Act takes full effect, beginning in January 2014.

The tax credits are geared toward low and middle-income Americans who do not have access to
affordable health insurance through an employer. The law specifies that employer-sponsored
insurance is affordable so long as a worker’s share of the premium does not exceed 9.5 percent of
the worker’s household income.

In its final interpretation of the law, the IRS said affordability should be based strictly on
individual coverage costs, however.

That means that, even if family coverage through an employer-based plan far exceeds the 9.5
percent cutoff, workers would not be eligible for the tax credits to help buy insurance for
children or nonworking dependents.

But Pollack said there was little hope for a legislative fix in Congress, where the House is
controlled by Republicans still bent on repealing the law.

Families USA health-policy director Kathleen Stoll said recent studies showed that anywhere
between 2 million and 4 million people would be adversely affected by the federal rule.

“We’d like to see it fixed because it clearly doesn’t reflect what Congress intended,” Stoll
said.

Meanwhile, a study by the nation’s leading group of financial-risk analysts said the cost of
medical claims will increase an average of 32 percent for Americans’ individual policies under
President Barack Obama’s overhaul.

By 2017, the estimated increase would be about 80 percent for Ohio, the report said, because
sicker people are expected to join the pool.

But the report, recently released by the Society of Actuaries to its members, makes no such
estimates for employer plans, the mainstay for workers and their families. That’s because the
primary impact of the law is on people who don’t have coverage through their jobs.

The administration said the study focused only on one piece of the puzzle and ignored
cost-relief strategies in the law such as tax credits to help people afford premiums and special
payments to insurers who attract an outsize share of the sick. The study also doesn’t take into
account the potential price-cutting effect of competition in new state insurance markets,
administration officials said.

Recently retired Medicare chief actuary Rick Foster, said “actuaries tend to be financially
conservative, so the various assumptions might be more inclined to consider what might go wrong
than to anticipate that everything will work beautifully.”

Kristi Bohn, an actuary who worked on the study, acknowledged it did not attempt to estimate the
effect of other factors, but said: “Claims cost is the most important driver of health-care
premiums.”

On the plus side, the report found that some states will see double-digit declines in costs for
claims in the individual market.